Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 1 of 31 Page ID #:2409

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -i- TABLE OF CONTENTS Page PRELIMINARY STATEMENT ............................................................................... 1 FACTUAL AND PROCEDURAL BACKGROUND .............................................. 2 A. Snap Conducted Its IPO on March 2, 2017 .......................................... 2 B. On March 8, 2017, Snap’s IPO Shares Were Commingled with Non-IPO Shares .................................................................................... 2 C. The Present Shareholder Lawsuits Were Filed on May 16, 2017 ........ 3 D. Lead Counsel Begins to Wrest Control of the Lawsuit from the Existing Plaintiffs .................................................................................. 5 E. Lead Counsel Substitutes the Court-Appointed Lead Plaintiff with Two Individuals Who Decline to Supervise the Lawsuit ............. 5 ARGUMENT ............................................................................................................. 9 I. CLASS CERTIFICATION SHOULD NOT PROCEED UNTIL THE COURT APPOINTS A NEW LEAD PLAINTIFF ........................................ 9 II. PLAINTIFF BEARS THE BURDEN OF PROVING THE PROPOSED CLASS MEETS EACH REQUIREMENT OF RULE 23 ...... 11 III. THE PROPOSED CLASS IS OVERBROAD AS IT INCLUDES INDIVIDUALS WITHOUT STANDING FOR SECTION 11 CLAIMS .... 12 A. To Have Standing under the Securities Act, Class Members Must Trace Their Shares Back to the Challenged IPO Prospectus .............. 13 B. The Proposed Class Must Be Restricted to Purchasers between March 2 and March 8, 2017 ................................................................ 15 IV. THE PROPOSED CLASS FAILS THE PREDOMINANCE REQUIREMENT BECAUSE DAMAGES CANNOT BE CALCULATED ............................................................................................ 15 A. Plaintiff’s Expert Fails to Identify a Specific Model of Damages for the Section 11 Claim ..................................................................... 17 B. Predominance of Class-wide Damages Cannot Be Established until the Court Determines “The Time [the] Suit Was Brought” ....... 19 V. THE PROPOSED CLASS REPRESENTATIVES HANDPICKED BY LEAD COUNSEL ARE INADEQUATE FIDUCIARIES ........................... 20 A. The Proposed Class Representatives Have Failed to Oversee the Litigation ............................................................................................. 21 1. Lead Plaintiff Is Inadequate and Has Failed to Participate in Discovery .............................................................................. 22 2. Messrs. Allen and Dandridge Yield Decisions to Counsel ...... 22 3. Messrs. Allen and Dandridge Lack Basic Knowledge about the Litigation ................................................................... 23 CONCLUSION ........................................................................................................ 25 Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 2 of 31 Page ID #:2410

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -ii- TABLE OF AUTHORITIES CASES Burkhalter Travel Agency v. MacFarms Int’l, Inc., 141 F.R.D. 144 (N.D. Cal. 1991) ................................................ 21, 23, 24, 25 Comcast Corp. v. Behrend, 569 U.S. 27 (2013) ........................................................................................ 16 Deirmenjian v. Deutsche Bank, A.G., 2010 U.S. Dist. LEXIS 150665 (C.D. Cal. May 13, 2010) .......................... 12 Fort Worth Emps.’ Ret. Fund v. J.P. Morgan Chase & Co., 301 F.R.D. 116 (S.D.N.Y. 2014) .................................................................. 18 French v. CBL & Assocs. Props., Inc., 2016 U.S. Dist. LEXIS 182038 (E.D. Tenn. Dec. 16, 2016) .................. 10, 11 Giron v. Hong Kong & Shanghai Bank Co., 2017 U.S. Dist. LEXIS 189087 (C.D. Cal. Nov. 15, 2017) .................... 23, 25 Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) ....................................................................... 21 Hanon v. Dataproducts Corp., 976 F.2d 497 (9th Cir. 1992) ......................................................................... 15 In re Broderbund/Learning Co. Sec. Litig., 294 F.3d 1201 (9th Cir. 2002) ................................................................. 19, 20 In re Century Alum. Co. Sec. Litig., 729 F.3d 1104 (9th Cir. 2013) ........................................................... 13, 14, 15 In re LendingClub Sec. Litig., 282 F. Supp. 3d 1171 (N.D. Cal. 2017) ........................................................ 14 In re Neopharm, Inc. Sec. Litig., 2004 U.S. Dist. LEXIS 5814 (N.D. Ill. Apr. 7, 2004) ....................... 9, 10, 11 In re POM Wonderful LLC Mktg. & Sales Practice Litig., 2014 WL 1225184 (C.D. Cal. Mar. 25, 2014) ........................................ 18, 19 In re Quarterdeck Office Systems, Inc. Securities Litigation, 1993 WL 623310 (C.D. Cal. Sept. 30, 1993) ......................................... passim In re Smith Barney Transfer Agent Litig., 823 F. Supp. 2d 202 (S.D.N.Y. 2011) ..................................................... 10, 11 Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 3 of 31 Page ID #:2411

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -iii- In re Storage Tech. Corp. Sec. Litig., 113 F.R.D. 113 (D. Colo. 1986) .................................................................... 24 In re Wash. Mut., Inc. Sec., Deriv. & ERISA Litig., 2010 U.S. Dist. LEXIS 142992 (W.D. Wash. Oct. 12, 2010) ................ 19, 20 Jovel v. Boiron, Inc., 2014 WL 1027874 (C.D. Cal. Feb. 27, 2014) ............................................... 21 Kassover v. Computer Depot, Inc., 691 F. Supp. 1205 (D. Minn. 1987), aff’d mem., 902 F.2d 1571 (8th Cir. 1990) ....................................................................... 24 Koenig v. Benson, 117 F.R.D. 330 (E.D.N.Y. 1987) .................................................................. 21 Kohler v. Hyatt Corp., 2008 U.S. Dist. LEXIS 63392 (C.D. Cal. July 23, 2008) ............................. 22 Krim v. pcOrder.com, Inc., 402 F.3d 489 (5th Cir. 2005) ......................................................................... 14 Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018 (9th Cir. 2003) ................................................................. 10, 11 Longest v. Green Tree Servicing LLC, 308 F.R.D. 310 (C.D. Cal. 2015) ............................................................ 16, 19 Loritz v. Exide Techs., 2015 WL 6790247 (C.D. Cal. July 21, 2015) ................................... 16, 17, 18 Mendoza v. Home Depot, U.S.A., Inc., 2010 U.S. Dist. LEXIS 13025 (C.D. Cal. Jan. 21, 2010) ............................. 22 Neal v. NaturalCare, Inc., 2014 U.S. Dist. LEXIS 11835 (C.D. Cal. Jan. 30, 2014) ....................... 10, 11 Perrin v. Sw. Water Co., 2014 U.S. Dist. LEXIS 185165 (C.D. Cal. July 2, 2014), aff’d sub nom. Hemmer Group v. Southwest Water Co., 663 F. App’x 496 (9th Cir. 2016) .................................................................................. 13, 15 Shiring v. Tier Techs., Inc., 244 F.R.D. 307 (E.D. Va. 2007) ................................................................... 21 Simon v. Ashworth, Inc., 2007 U.S. Dist. LEXIS 96131 (C.D. Cal. Sept. 28, 2007) ...................... 22, 23 Sudunagunta v. Nantkwest, Inc., 2018 U.S. Dist. LEXIS 137084 (C.D. Cal. Aug. 13, 2018) ......................... 14 Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 4 of 31 Page ID #:2412

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -iv- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) ................................................................................ 11, 12 Werdebaugh v. Blue Diamond Growers, 2014 WL 7148923 (N.D. Cal. Dec. 15, 2014) ............................ 16, 17, 18, 19 Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180 (9th Cir.), amended, 273 F.3d 1266 (9th Cir. 2001) ............................................................................................... 11 STATUTES 15 U.S.C. § 77k(e) ................................................................................................... 19 15 U.S.C. § 77z-1(a)(2)(A)(iii) ................................................................................. 4 15 U.S.C. § 77z-1(a)(3) ............................................................................................ 3 15 U.S.C. § 77z-1(a)(3)(B)(i) ............................................................................... 4, 9 15 U.S.C. § 77z-1(a)(3)(B)(iii) ................................................................................. 4 15 U.S.C. § 78u-4(a)(2)(A)(iii) ................................................................................. 4 15 U.S.C. § 78u-4(a)(3) ............................................................................................. 3 15 U.S.C. § 78u-4(a)(3)(B)(i) ................................................................................ 4, 9 15 U.S.C. § 78u-4(a)(3)(B)(iii) .................................................................................. 4 RULES Fed. R. Civ. P. 23(a)(4) ............................................................................................ 21 Fed. R. Civ. P. 23(b)(3) ........................................................................................... 16 Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 5 of 31 Page ID #:2413

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -v- TABLE OF ABBREVIATIONS Abbreviation Meaning Plaintiffs Lead Plaintiff Thomas DiBiase and Named Plaintiff David Steinberg Complaint or Compl. Plaintiffs’ Consolidated Amended Class Action Complaint for Violation of the Federal Securities Laws Snap or Company Snap Inc. Snap Defendants Snap, Evan Spiegel, Robert Murphy, Andrew Vollero, and Imran Khan Ex. _ Exhibits to Declaration of Doru Gavril in Support of Defendants’ Opposition to Lead Plaintiff’s Motion For Class Certification (“Gavril Decl.”), filed herewith RS Excerpts from Snap’s Registration Statement on Form S-1, declared effective on March 1, 2017, including Form 424B4 Prospectus filed on March 3, 2017, attached as Ex. 1 to Gavril Decl. IPO Initial public offering PSLRA Private Securities Litigation Reform Act of 1995 Thomas Decl. Declaration of Winston O. Thomas, filed herewith Porwal Decl. Declaration of Atul Porwal, filed herewith Allen Tr. Excerpts from the transcript of Donald Allen, attached as Ex. 4 to Gavril Decl. Dandridge Tr. Excerpts from the transcript of Shawn B. Dandridge, attached as Ex. 5 to Gavril Decl. Nye Report Report of Zachary Nye, Ph.D attached as Exhibit H to ECF No. 114-2 Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 6 of 31 Page ID #:2414

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -1- PRELIMINARY STATEMENT The motion to certify the class cannot be granted in its current form. The motion suffers from multiple deficiencies, each of which must be corrected before a class is certified. Before addressing the problems with the present motion, however, there is a more fundamental issue preventing certification: the sole Court-appointed Lead Plaintiff, Mr. DiBiase, has opted not to continue his role in this case—abruptly declining to attend his noticed deposition hours before it was scheduled. The Private Securities Litigation Reform Act of 1995 (“PSLRA”) makes it clear that a lead plaintiff, not the lawyers, must control the litigation. Lead Counsel would like to paper over this deficiency by getting this Court to rubberstamp its selection of proposed class representatives to replace Mr. DiBiase. As discussed below, these individuals’ depositions have revealed their inadequacy as class fiduciaries. The Court should reopen the lead plaintiff process and appoint a new lead plaintiff—who would then, consistent with the PSLRA, appoint a new lead counsel. Then, and only then, may the Court properly consider a motion to certify the class. Once that threshold issue is resolved, the motion (assuming the new lead plaintiff wishes to pursue the motion in its current form) should still be denied because the proposed class falls short of the typicality, predominance, and adequacy requirements of Rule 23. First, the proposed class is overbroad. Only investors who can trace their stock purchases back to shares sold in Snap’s IPO have standing for a Securities Act claim. No investor who bought shares after March 8, 2017, can trace his or her shares, because on that date pre-IPO shares entered the market and became inextricably commingled with the IPO shares. The Securities Act class should be limited only to those who purchased shares between March 2 and March 8, 2017. Second, as Plaintiff’s own expert admits, Section 11 of the Securities Act specifies a statutory formula for damages that depends on the date this lawsuit was Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 7 of 31 Page ID #:2415

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -2- filed. The first complaint was filed on May 16, 2017. Accordingly, the Court should establish that day as the date this lawsuit was filed, and require Plaintiff’s expert to specify an actual damages model based on this date. Third, the proposed class lacks an adequate representative. In addition to the fact that the Lead Plaintiff appointed by this Court no longer wishes to serve and failed to attend his own noticed deposition, the two new individuals advanced by Lead Counsel are inadequate. At their depositions, both of these individuals testified that they intend to defer to Lead Counsel on litigation decisions, while confessing their ignorance of the claims and parties in this action. The Court should not certify a class until it has selected a new lead plaintiff and that lead plaintiff corrects these deficiencies. Each of these obstacles would be enough to deny class certification; together, they are fatal. FACTUAL AND PROCEDURAL BACKGROUND A. Snap Conducted Its IPO on March 2, 2017 Snap conducted its IPO on March 2, 2017. RS at 5-6. Snap filed a Registration Statement and Prospectus with the SEC in connection to the IPO. Id. Several banks served as underwriters to the IPO, purchasing all IPO shares from Snap at a slight discount and then reselling them to the public at $17. RS at 10-11. B. On March 8, 2017, Snap’s IPO Shares Were Commingled with Non-IPO Shares As is customary in IPOs, existing shareholders of Snap entered into “lock-up” agreements that temporarily prevented them from selling the shares they had acquired before the IPO. RS at 9-10. Lock-up agreements are a common way of ensuring that a sudden supply of shares does not destabilize the share price after a public offering. Under these lock-up agreements, the earliest that existing shareholders could sell their pre-IPO shares would have been 150 days after the IPO, on July 29, 2017. Id. These lock-up agreements could, however, be waived at an earlier date by the lead underwriters. Id. at 8. Shareholders who acquired their Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 8 of 31 Page ID #:2416

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -3- stock pursuant to the vesting of restricted stock units were also subject to lock-up agreements under their individual grants. Id.; Porwal Decl. ¶ 3. In fact, such a waiver occurred. On March 8, 2017, at his request, a shareholder was granted a waiver for 100,000 shares of Class A common stock that had been issued to him before the IPO. Thomas Decl. ¶ 4. That shareholder immediately sold 100,000 shares in the open market on March 8, 2017. Thomas Decl. ¶ 5. As of that date, therefore, Snap shares that had been issued in the IPO became commingled with shares that had not been sold pursuant to the IPO Prospectus. In modern practice, shares are not based on paper certificates, but rather are accounted for by electronic entries with a central depository. Accordingly, shares are entirely fungible and once commingled, cannot be told apart. C. The Present Shareholder Lawsuits Were Filed on May 16, 2017 The first complaint in this action was filed on May 16, 2017, claiming that investors had suffered damages due to alleged violations of Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. ECF No. 1. On that date, Snap shares were trading at $20.78, well above the IPO price of $17, raising a question as to what damages the lawsuit could possibly allege. Ex. 2. A second lawsuit was filed on July 10, 2017, the first day the stock traded below the IPO price of $17, closing at $16.99. This lawsuit also alleged damages pursuant to the same securities laws. On September 18, 2017, the Court consolidated the actions and, as prescribed in both the Securities Act and the Exchange Act, 15 U.S.C. § 77z-1(a)(3) & § 78u-4(a)(3), undertook the statutory process for selecting a lead plaintiff. ECF No. 54. As the Court is aware, in order to curb the abuses encountered in lawyer-driven securities litigation, Congress amended the securities laws with the passage of the PSLRA in 1995. Among other reforms, the PSLRA required that each plaintiff attach a sworn certification to his complaint attesting that he “is willing to serve as a representative party on behalf of a class, including providing testimony at deposition Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 9 of 31 Page ID #:2417

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -4- and trial, if necessary.” 15 U.S.C. § 77z-1(a)(2)(A)(iii) & § 78u-4(a)(2)(A)(iii). The PSLRA also required that courts “shall appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members.” 15 U.S.C. § 77z-1(a)(3)(B)(i) & § 78u-4(a)(3)(B)(i) (emphasis added). The PSLRA created a rebuttable presumption that the candidate with “the largest financial interest in the relief sought by the class” is the most adequate lead plaintiff. 15 U.S.C. § 77z-1(a)(3)(B)(iii) & § 78u-4(a)(3)(B)(iii). Here, the Court rejected the lead plaintiff candidate with the largest alleged losses, finding that he was subject to unique defenses. ECF No. 54. Instead, the Court appointed Thomas DiBiase as Lead Plaintiff, and selected his counsel, Kessler Topaz Meltzer & Check, LLP (“Kessler Topaz”), as Lead Counsel, and Rosman & Germain LLP (“Rosman & German”) as Liaison Counsel. Id. Notably, Mr. DiBiase did not purchase Snap shares until March 27, 2017, when he bought 46,200 shares. Ex. 3. Therefore, by the time Mr. DiBiase made his first purchase, IPO shares had already been commingled with pre-IPO shares, making it impossible to determine whether Mr. DiBiase, or indeed, anyone else purchasing after March 8, 2017, bought pre-IPO shares or shares sold pursuant to the IPO Prospectus. Following his appointment as Lead Plaintiff, Mr. DiBiase filed a Consolidated Amended Complaint (“CAC”) on November 1, 2017, in which he was joined by Named Plaintiff David Steinberg (who is also now withdrawing). ECF No. 67. The CAC alleged that Defendants failed to disclose in the IPO Prospectus: (1) a slowdown in Snap’s growth caused by Instagram competition; (2) a lawsuit filed by former Snap employee Anthony Pompliano; and (3) that Snap purportedly boosted user engagement by using what Mr. DiBiase refers to as “growth hacking.” Id. Defendants moved to dismiss. ECF No. 73. Defendants pointed out that Snap disclosed the very information Mr. DiBiase believed had been omitted, and Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 10 of 31 Page ID #:2418

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -5- Mr. DiBiase’s “growth hacking” allegations were a tortured reading of remarks by Snap’s CEO indicating that the Company was not using such techniques, unlike its competitors. ECF No. 73. In addition, Defendants also pointed out that Mr. DiBiase could not allege any damages, since, on the date the lawsuit was initially filed, Snap stock was trading well above the IPO price. ECF No. 73. On June 7, 2018, the Court denied the motion to dismiss. ECF No. 92. With respect to damages, the Court noted that Mr. DiBiase’s allegations were sufficient at the pleading stage. Id. at 14-15. The Court expressly reserved the question of determining how damages, if any, may be calculated for a later stage, noting that it “may pose a separate issue at class certification.” Id. at 16 & n.26. D. Lead Counsel Begins to Wrest Control of the Lawsuit from the Existing Plaintiffs In its order on the motion to dismiss, the Court ordered Mr. DiBiase to move for class certification no later than September 5, 2018. Id. at 16. Beginning in August 30, 2018, Lead Counsel made a series of filings that effectively removes control of the lawsuit from Mr. DiBiase and places it entirely in counsel’s hands. On August 30, 2018, Lead Counsel moved to withdraw David Steinberg as Named Plaintiff and substitute Messrs. Donald R. Allen and Shawn B. Dandridge as class representatives for a proposed class of “persons and entities who purchased or otherwise acquired Snap Class A common Stock (‘Snap Common Stock’) between March 2, 2017 and August 10, 2017 (‘Class Period’), inclusive, and were damaged thereby (‘Class’).” ECF Nos. 114 & 115. At this time, Lead Counsel still listed Lead Plaintiff Mr. DiBiase as a proposed class representative. ECF No. 114. What did remain unchanged, however, was Lead Counsel’s proposal for Class Counsel— that is, Lead Counsel and Liaison Counsel proposed themselves. Id. E. Lead Counsel Substitutes the Court-Appointed Lead Plaintiff with Two Individuals Who Decline to Supervise the Lawsuit Mr. DiBiase’s tenure as a proposed class representative lasted exactly 21 Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 11 of 31 Page ID #:2419

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -6- days. On September 20, 2018, the day before Mr. DiBiase’s deposition—which Defendants noticed in Toronto, Canada, at Mr. DiBiase’s request—Lead Counsel indicated to Defendants that Mr. DiBiase would not attend his scheduled deposition due to undisclosed personal reasons. On September 24, 2018, Lead Counsel informed Defendants that Mr. DiBiase wished to withdraw from his own lawsuit. The next day, Defendants urged Lead Counsel to inform the Court promptly of Mr. DiBiase’s withdrawal and reopen the statutory lead plaintiff process. Lead Counsel waited until September 28, 2018 to inform the Court of Mr. DiBiase’s withdrawal, even while claiming that he would continue to “serve” as lead plaintiff until Messrs. Allen and Dandridge could be selected as class representatives. ECF No. 118. On October 3 and 4, 2018, two additional plaintiffs filed statements in opposition to Lead Counsel’s present motion to certify the class. ECF Nos. 120 & 123. The first, Mr. Iuso, is a plaintiff who filed his action in state court and whose opposition notes the significant deficiency in the calculation of damages for the proposed class. ECF No. 120. The second, Mr. Gupta, was the runner-up in the initial contest for lead plaintiff and he argues in favor of reopening the lead plaintiff process. ECF. No. 123. In the meantime, the depositions of Lead Counsel’s proposed class representatives, Messrs. Allen and Dandridge, revealed that they have no intention of supervising Lead Counsel, know little about the lawsuit, and cannot even name the defendants in this action, much less the claims. Over the strenuous objections of Lead Counsel, both Messrs. Allen and Dandridge admitted that they relied on their attorneys to make decisions in this case. At Mr. Allen’s deposition on September 19, 2018, he outright denied responsibility to direct the litigation: Q Why is there not any agreement between you, Mr. Dibase, and Mr. Dandridge on how to direct the litigation? Ms. Kaplan: Objection. Vague. Calls for speculation. The Witness: Everything goes through my counsel, so I just go with Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 12 of 31 Page ID #:2420

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -7- their lead. By Mr. Liming: Q Do you believe that you are responsible for directing the litigation? Ms. Kaplan: Object to the form. Vague. The Witness: I would just be speculating, so I would say no. Ex. 4 (Allen Tr.) at 158:18-159:6. Mr. Allen also admitted that he has not contributed any views to this litigation: “Q So to date, as of today, have you been giving your opinion on this litigation? I am not asking for the contents of the opinion. A No.” Id. at 159:17-20. Similarly, on September 20, 2018, Mr. Dandridge testified at his deposition: Q. What do you believe would happen if you disagreed with counsel's recommendation in this litigation? Mr. Barlieb: Objection. The Witness: I would assume we would talk things through and come to a better understanding, but, I mean, ultimately I'm going to have to rely on their knowledge. Ex. 5 (Dandridge Tr.) at 154:16-23. Lead Counsel’s proposed candidates also gave statements at their deposition contradicting core claims in the CAC. Mr. Allen did not believe that Instagram and Snapchat were competitors: “Q Did you believe at any point prior to March 2nd, 2017 that Snapchat and Instagram were competing products? Ms. Kaplan: Same objection. The Witness: No.” Ex. 4 (Allen Tr.) at 88:24-89:3. He also did not know whether disclosure about competition from Instagram was an issue in this lawsuit. Id. at 141:24-143:1. Similarly, Mr. Dandridge admitted that Snap’s Prospectus informed its readers of competition from Instagram: “Q. . . . Does this statement on page 124 inform you that Snap faced competition from Instagram? Mr. Barlieb: Objection to form. The Witness: It does.” Ex. 5 (Dandridge Tr.) at 122:18-23. Mr. Dandridge also stated that the alleged disclosure by Mr. Spiegel regarding growth Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 13 of 31 Page ID #:2421

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -8- hacking did not actually indicate that Snap engaged in growth hacking: Q. Do you believe that Evan is saying that Snap relies on growth hacking? Mr. Barlieb: Objection to form. The Witness: He -- he's saying that they -- no, I do not. By Mr. Liming: Q. What do you believe that he is saying instead? A. That he -- that they are – they’re using different metrics to -- to calculate – better metrics, rather, to calculate the daily average user growth. Q: Do you think that Evan Spiegel is saying that Snap's competitors reliance on growth hacking is important for Snap’s business? Mr. Barlieb: Object. By Mr. Liming: Q. And I would direct you to last line of his statements? Mr. Barlieb: Objection to form. The Witness: I--I--I don’t really know. It--it’s more he-- no, I don’t think that. By Mr. Liming: Q. And what do you think he’s saying in that last sentence? Mr. Barlieb: Objection to form. The Witness: That Snap’s competitors have a relaxed standard or – they – they do things differently than what Snap does. By Mr. Liming: Q. Do you think that Evan Spiegel is saying that Snap has a relaxed standard for growth hacking? Mr. Barlieb: Objection to form. The Witness: No. Ex. 5 (Dandridge Tr.) at 141:10-142:21. Furthermore, Messrs. Allen and Dandridge both failed to identity key figures Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 14 of 31 Page ID #:2422

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -9- in this litigation. Neither could name the Individual Defendants. Ex. 4 (Allen Tr.) at 29:25-30:12; Ex. 5 (Dandridge Tr.) at 26:9-28:2. Mr. Dandridge also said he did not recall ever hearing of Anthony Pompliano. Ex. 5 (Dandridge Tr.) at 130:21-23. Tellingly, neither individual could identify the law firm acting as Liaison Counsel. Ex. 4 (Allen Tr.) at 138:18-23; Ex. 5 (Dandridge Tr.) at 117:22-118:3. Notably, Mr. Allen admitted that, after receiving Defendants’ Request for Documents, he failed to preserve documents. Ex. 4 (Allen Tr.) at 31:4-32:16. Mr. Allen goes on to explicitly admit that he deleted emails regarding the Defendants, despite his notice of this litigation. Id. at 35:13-19. In sum, Messrs. Allen and Dandridge, handpicked by Lead Counsel to replace the Lead Plaintiff appointed by this Court, are wholly inadequate to serve in a fiduciary capacity for the proposed class. Their inadequacy, as well as the class’s overbroad definition and inability to show predominance with respect to damages, require denial of class certification without prejudice. Instead, the Court should reopen the lead plaintiff process, appoint a qualified fiduciary for the proposed class, and define a class of appropriate scope. ARGUMENT I. CLASS CERTIFICATION SHOULD NOT PROCEED UNTIL THE COURT APPOINTS A NEW LEAD PLAINTIFF Before the elements of class certification should even be considered, the proposed class must have a new lead plaintiff. As previously discussed, the PSLRA mandates that the Court—not Lead Counsel—appoint the most capable candidate to be lead plaintiff. 15 U.S.C. § 77z-1(a)(3)(B)(i) & § 78u-4(a)(3)(B)(i). In re Neopharm, Inc. Securities Litigation is particularly instructive in this situation, holding that a new lead plaintiff must replace a withdrawing lead plaintiff before consideration of class certification. 2004 U.S. Dist. LEXIS 5814, at *9-10 (N.D. Ill. Apr. 7, 2004). In Neopharm, the court concurrently considered lead plaintiff’s motion to withdraw and plaintiff’s motion for class certification. Id. at Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 15 of 31 Page ID #:2423

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -10- *2. The court allowed lead plaintiff to withdraw but declined to “merely accept[] counsel’s suggestion [for lead plaintiff] with input from no other potential lead plaintiff[,]” which would be “contrary to the PSLRA.” Id. at *9. The court noted counsel’s attempt to “turn the analysis on its head” and held that “only after a most adequate plaintiff is selected by the court is a plaintiff’s choice for lead counsel considered.” Id. at *5 (emphasis added). The court reopened the process of appointing lead plaintiff and held that doing so “permits this court to make a reasoned analysis under the PSLRA rather than to summarily accept the submissions provided by lead counsel for the former lead plaintiff.” Id. at *9. As a result of lead plaintiff’s motion to withdraw, the court saw “no reason to address the issue of class certification until a new lead plaintiff is appointed” and denied class certification. Id. at *9-10. Other courts have similarly indicated that a class must have a court-appointed lead plaintiff before the case can continue. See In re Smith Barney Transfer Agent Litig., 823 F. Supp. 2d 202, 206 (S.D.N.Y. 2011) (staying discovery until the appointment of a new lead plaintiff after lead plaintiff withdrew); French v. CBL & Assocs. Props., Inc., 2016 U.S. Dist. LEXIS 182038, at *5-6 (E.D. Tenn. Dec. 16, 2016) (holding, after lead plaintiff withdrew, that the “case now lacks the requisite lead plaintiff mandated by 15 U.S.C. § 78u-4(a)(3)(B)[,]” and soliciting motions from all putative class members to act as lead plaintiff within 15 days or else recommending dismissal of action) (emphasis added).1 Lead Counsel’s attempt to bypass the PSLRA’s requirements by appointing its own lead plaintiff is identical to counsel’s failed attempt in Neopharm and should 1 Illustrating the centrality of the statutorily-required lead plaintiff even after a class is certified, courts have decertified classes where the lead plaintiff could not continue. E.g., Neal v. NaturalCare, Inc., 2014 U.S. Dist. LEXIS 11835, at *14-16 (C.D. Cal. Jan. 30, 2014) (decertifying class and refusing to substitute class representative where sole class representative lacked prudential standing prior to class certification); Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1023 (9th Cir. 2003) (decertifying class and dismissing action where sole class representative lacked constitutional standing prior to class certification). Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 16 of 31 Page ID #:2424

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -11- be denied in favor of reopening the lead plaintiff process. The Court should not allow Lead Counsel to usurp the Court’s responsibility to select the most adequate lead plaintiff, especially where the evidence shows that Mr. Allen and Mr. Dandridge cannot adequately represent the class. See Neopharm, 2004 U.S. Dist. LEXIS 5814, at *5-6 (noting that counsel’s proposed substitutes did not file a complaint or move to serve as lead plaintiff within 60 days of being noticed of the suit). Postponing consideration of class certification until after the Court’s evaluation and appointment of a new lead plaintiff is the only resolution that ensures the suit will proceed in compliance with the PSLRA. See id. at *9-10; Smith Barney, 823 F. Supp. 2d at 206; French, 2016 U.S. Dist. LEXIS 182038, at *5-6; cf. Neal, 2014 U.S. Dist. LEXIS 11835, at *16; Lierboe, 350 F.3d at 1023.2 II. PLAINTIFF BEARS THE BURDEN OF PROVING THE PROPOSED CLASS MEETS EACH REQUIREMENT OF RULE 23 Should the new lead plaintiff elect to proceed with the current motion, the Court should decline to certify the class as currently proposed because it fails to meet multiple requirements of Federal Rule of Civil Procedure 23. It is blackletter law that it is the moving plaintiff who bears the burden of proving that the proposed class meets the prerequisites of Rule 23. Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186, 1197 (9th Cir.) (affirming denial of class certification pursuant to Rule 23(b)), amended, 273 F.3d 1266 (9th Cir. 2001). As the Supreme Court held in reversing class certification in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 367 (2011): Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule—that is, he must be prepared to prove that there are in fact 2 If Lead Counsel insists on using Mr. DiBiase as a placeholder lead plaintiff, the Defendants have a right to—and are ready to—depose Mr. DiBiase as he previously agreed to. ECF No. 19-1, Ex. A. Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 17 of 31 Page ID #:2425

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -12- sufficiently numerous parties, common questions of law or fact, etc. . . . . [C]ertification is proper only if “the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied” . . . that “rigorous analysis” will entail some overlap with the merits of the plaintiff's underlying claim. That cannot be helped. Id. at 350-52 (citations omitted). Here, the proposed class fails for three reasons. First, the class definition is overbroad; after pre-IPO shares were commingled with IPO shares on March 8, 2017, no purchaser of Snap shares has standing to assert a Securities Act claim. Second, the plaintiff cannot show that damages can be calculated on a class-wide basis without the Court first determining the date of filing of this lawsuit. Until such a determination is made, predominance of class-wide issues cannot be established, as required by Rule 23(b)(3). Third, the two proposed class representatives, Messrs. Allen and Dandridge, are inadequate or unable to serve as credible fiduciaries as required by Rule 23(a)(4). Their candidacy subverts the PSLRA, while allowing the lawyers to discard the Court-appointed Lead Plaintiff and proceed with more pliant plaintiffs of counsel’s own choosing. III. THE PROPOSED CLASS IS OVERBROAD AS IT INCLUDES INDIVIDUALS WITHOUT STANDING FOR SECTION 11 CLAIMS Any Section 11 class must, as a matter of law, exclude purchasers of Snap stock after March 8, 2017, because they lack standing for a Securities Act claim. Standing is a threshold issue that ensures the litigants are proper parties to appear before the court. Deirmenjian v. Deutsche Bank, A.G., 2010 U.S. Dist. LEXIS 150665, at *18 (C.D. Cal. May 13, 2010). Since “no class may be certified that contains members lacking Article III standing,” a class must be defined in a way to exclude those who have not been harmed by an allegedly misleading registration statement. Id. at *17-18 (citation omitted). Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 18 of 31 Page ID #:2426

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -13- A. To Have Standing under the Securities Act, Class Members Must Trace Their Shares Back to the Challenged IPO Prospectus As the Ninth Circuit held in its analysis of Section 11 standing in Century Aluminum, shareholders only have standing if they can trace their shares to the allegedly misleading registration statement. In re Century Alum. Co. Sec. Litig., 729 F.3d 1104, 1106-07 (9th Cir. 2013). Shareholders can trace by proving either that they purchased directly in the offering or that they can “trace the chain of title for their shares back to the [disputed] offering, starting with their own purchases and ending with someone who bought directly in the [disputed] offering.” Id. In Century Aluminum, the Ninth Circuit emphasized the difficulty in tracing aftermarket purchases to the offering, noting that tracing “is ‘often impossible’ because ‘most trading is done through brokers who neither know nor care whether they are getting newly registered or old shares,’ and ‘many brokerage houses do not identify specific shares with particular accounts but instead treat the account as having an undivided interest in the house’s position.’” Id. at 1107 (citation omitted); see also Perrin v. Sw. Water Co., 2014 U.S. Dist. LEXIS 185165, at *5 (C.D. Cal. July 2, 2014) (noting that plaintiffs cannot trace after commingling because the depository corporation “holds deposited securities in ‘fungible bulk,’ such that its participants do not own specifically identifiable shares . . . . Rather, participations own a ‘pro rata interest in the aggregate number of shares of a particular issue held at [depository].’”) (citation omitted), aff’d sub nom. Hemmer Group v. Southwest Water Co., 663 F. App’x 496 (9th Cir. 2016). Tracing is strictly construed. It is not enough for a plaintiff to show a probability that his or her shares were issued pursuant to the disputed registration statement. For example, in In re Quarterdeck Office Systems, Inc. Securities Litigation, 1993 WL 623310, at *2-3 (C.D. Cal. Sept. 30, 1993), the court addressed Section 11 standing where plaintiffs who purchased in the aftermarket claimed they had standing because 97% of the shares available at the time of their purchase Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 19 of 31 Page ID #:2427

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -14- consisted of IPO shares. The court rejected this “statistical analysis to show that their shares ‘might’ have been registered shares[,]” and held that “[t]his speculative basis for standing, without more, is insufficient for the purposes of § 11.” Id. at *3. As further explained in Krim v. pcOrder.com, Inc., 402 F.3d 489, 497-98 (5th Cir. 2005), a statistical analysis for tracing purposes is unusable because “every aftermarket purchaser would have standing for every share, despite the language of Section 11, limiting suit to ‘any person acquiring such security.’” (Citation omitted). Krim held that Section 11 standing did not exist for aftermarket purchasers where 99.85% of the available shares in the market were issued pursuant to the disputed offering, and analogized that “[t]aking a United States resident at random, there is a 99.83% chance that she will be from somewhere other than Wyoming. Does this high statistical likelihood alone, assuming for whatever reason there is no other information available, mean that she can avail herself of diversity jurisdiction in a suit against a Wyoming resident? Surely not.” Id. at 497. Thus, traceability “is not a matter of probability, but rather is construed literally and requires a showing that the shares purchased were actually the offending shares.” In re LendingClub Sec. Litig., 282 F. Supp. 3d 1171, 1180 (N.D. Cal. 2017) (holding that shares were traceable only if purchased in the IPO or in the market before the first day that non-IPO shares entered the market and commingled).3 3 A decision from this District, Sudunagunta v. Nantkwest, Inc., 2018 U.S. Dist. LEXIS 137084, at *18 (C.D. Cal. Aug. 13, 2018), has granted certification to a class merely based on a likelihood that class members could trace their shares to the challenged offering. The decision has been appealed, as it runs contrary to the precedents in Quarterdeck and Krim, and misinterprets Century Aluminum’s note that tracing “generally poses no obstacle” where shares were sold in a single offering. 2018 U.S. Dist. LEXIS 137084, at *18 (quoting Century Aluminum, 729 F.3d at 1106) (emphasis added). As recognized by LendingClub, where the company has conducted a single offering but shares subsequently entered the market that were not subject to the challenged offering, tracing is still “construed literally and requires a showing that the shares purchased were actually the offending shares.” LendingClub, 282 F. Supp. 3d at 1180. Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 20 of 31 Page ID #:2428

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -15- B. The Proposed Class Must Be Restricted to Purchasers between March 2 and March 8, 2017 From March 2 to March 7, 2017, the only Snap shares in the market were those issued pursuant to the IPO. As discussed above, on March 8, 2017, a shareholder sold his pre-IPO shares, which were not issued pursuant to the IPO Prospectus. Thomas Dec. ¶ 5. As a result of this sale of non-IPO shares, the pool of Snap shares available for purchase thereafter contained a mix of indistinguishable non-IPO and IPO shares. Purchasers of Snap shares after March 8, 2017, cannot trace their shares to the IPO because not all of Snap’s shares then in the market were issued pursuant to the IPO Prospectus Plaintiff challenges.4 Accordingly, if the Court certifies a class, any Section 11 class must be restricted to purchasers of Snap shares between March 2, 2017, and March 8, 2017.5 IV. THE PROPOSED CLASS FAILS THE PREDOMINANCE REQUIREMENT BECAUSE DAMAGES CANNOT BE CALCULATED The Court should also deny class certification because the motion fails to show that damages can be calculated on a class-wide basis. While the Court considered the damages issue at the pleading stage, it reserved its right to reconsider 4 As discussed above, tracing the chain of title for shares is “often impossible” where non-IPO shares and IPO shares commingled. Century Aluminum, 729 F.3d at 1107. (noting that brokers do not identify specific shares with particular accounts but instead treat an account as having an undivided interest in the house’s position); Perrin, 2014 U.S. Dist. LEXIS 185165, at *5 (noting “DTC holds deposited securities in ‘fungible bulk,’ such that its participants do not own specifically identifiable shares.”). 5 Mr. DiBiase, the withdrawing Lead Plaintiff, is one of those proposed class members that cannot trace his shares to the IPO, having purchased his Snap shares on and after March 27, 2018, once the IPO shares had been commingled with pre-IPO shares. Accordingly, Mr. DiBiase would lack typicality as required by Rule 23(a)(3), yet another reason to deny class certification. Class certification “should not be granted ‘if there is a danger that absent class members will suffer if their representative is preoccupied with defenses unique to it.’” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (citation omitted); Quarterdeck, 1993 WL 623310, at *4 (“The presence of these unique defenses is an adequate ground for denying a motion”). Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 21 of 31 Page ID #:2429

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -16- this question at a later stage. Now, the Class faces the heavier burden of satisfying Rule 23(b)(3)’s requirement that “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The motion does not satisfy this requirement. This Court’s decision in Loritz is especially persuasive, where it held “Rule 23(b)(3)’s predominance requirement also requires the moving party to show that ‘damages are capable of measurement on a classwide basis.’” Loritz v. Exide Techs., 2015 WL 6790247, at *3 (C.D. Cal. July 21, 2015) (quoting Comcast Corp. v. Behrend, 569 U.S. 27, 34 (2013)). The Court held that plaintiffs must tie their damages methodology to their theory of liability and show that the proposed damages stemmed specifically from the defendants’ actions. Id. Accordingly, the Court held that plaintiffs did not satisfy Rule 23(b)(3) where plaintiffs’ expert failed to set forth a model of damages and only discussed “general techniques” without “t[ying] these theories to the facts of this case or to each other—in other words, he fail[ed] to propose one model explaining how he would use these techniques in concert to calculate damages in this case.” Id. at *22. In Loritz, this Court based its decision on the Supreme Court’s holding in Comcast, which required that “a model purporting to serve as evidence of damages in this class action must measure only those damages attributable to that theory.” 569 U.S. at 35. The Supreme Court explained that “[i]f the model does not even attempt to do that, it cannot possibly establish that damages are susceptible of measurement across the entire class for purposes of Rule 23(b)(3).” Id. As with the other requirements of Rule 23, Plaintiff bears the burden of showing predominance. Plaintiff must show “evidentiary proof” of damages under his theory; it is not enough to simply state that calculation of damages will be a “mechanical task.” Longest v. Green Tree Servicing LLC, 308 F.R.D. 310, 333 Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 22 of 31 Page ID #:2430

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -17- (C.D. Cal. 2015) (citation omitted); Werdebaugh v. Blue Diamond Growers, 2014 WL 7148923, at *14 (N.D. Cal. Dec. 15, 2014) (“the Court is obligated to do more than rubberstamp a proposed damages class merely because a plaintiff's expert purports to have used a peer reviewed methodology such as a regression analysis.”). Here, Plaintiff’s damages analysis falls well short of this requirement for two reasons. First, Plaintiff’s purported damages expert fails to identify any specific damages model for the Section 11 claim. Second, damages cannot indeed be calculated until the Court determines the starting date of this lawsuit, which affects the statutory formula for calculating damages. A. Plaintiff’s Expert Fails to Identify a Specific Model of Damages for the Section 11 Claim Plaintiff has not satisfied his Rule 23(b)(3) burden of presenting a damages methodology that can calculate class-wide damages under Section 11. The Class’s expert report by Zachary Nye is deficient because both (1) it fails to specify an actual model of damages, and (2) because it fails to account for confounding factors and show how the stock price was specifically impacted by Plaintiff’s theory of liability. Nye Fails to Specify an Actual Model. Dr. Nye’s report contains no model and only states, in conclusory terms, that an event study could calculate price inflation to determine “value” and measure damages: “price inflation present in Snap stock during the Class Period may be measured on a Class-wide basis using a commonly applied event study of the change in the stock’s price caused by the alleged corrective events.” Nye Rep. ¶ 62. Nye’s impressionistic description of this speculative event study is that it would “analyz[e] the change in a security’s price caused by a corrective disclosure and/or the materialization of a concealed risk” but does not explain how his proposal would function. This speculative approach to damages is the reason the Court declined to certify a class in Loritz. As is the case with Dr. Nye’s report, in Loritz the Court Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 23 of 31 Page ID #:2431

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -18- rejected a report that only discussed “general techniques” without “t[ying] these theories to the facts of this case or to each other—in other words, . . . fail[ing] to propose one model” over another. 2015 WL 6790247, at *22. Other courts have also held that plaintiffs must specify an actual model of damages tied to their theory of liability under Rule 23(b)(3). See, e.g., In re POM Wonderful LLC Mktg. & Sales Practice Litig., 2014 WL 1225184, at *5 (C.D. Cal. Mar. 25, 2014) (decertifying class where the court could not “conduct the required ‘rigorous analysis’ where there is nothing of substance to analyze.”); Fort Worth Emps.’ Ret. Fund v. J.P. Morgan Chase & Co., 301 F.R.D. 116, 141 (S.D.N.Y. 2014) (denying class certification where plaintiff’s expert was “confident” in his ability to apply a damages model but “has not created such a model to date”). Nye Fails to Account for Confounding Factors. In addition, Dr. Nye’s “analysis” also fails to account for confounding factors that exclude alternative explanations for damages. As this Court recognized in Loritz, this failure to set forth an actual model of damages in a securities case is “particularly problematic” where, as here, “there are multiple alleged misrepresentations[.]” 2015 WL 6790247, at *22. Indeed, Nye concedes that stock prices may fluctuate for reasons unrelated to alleged securities fraud: “Other factors can include changes in market and industry conditions or the dissemination of material, non-fraud-related, Company specific information.” Nye Rep. ¶ 57. Once again, he fails to actually explain how he would account for such factors, stating in the most conclusory fashion that his putative model would “isolate Company-specific price movement caused by the revelation of true facts related to the alleged fraud from price movement caused by other factors.” Id. Absent from Nye’s description is any discussion of how these factors will be measured, what weight will be given to them, and how damages can be specifically attributed to the Defendants’ actions. Without a discussion of how Dr. Nye accounts for these confounding factors, the Class cannot attribute their losses Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 24 of 31 Page ID #:2432

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -19- specifically to the alleged omissions. See Loritz, 2015 WL 6790247, at *22; POM Wonderful, 2014 WL 1225184, at *5; Werdebaugh, 2014 WL 7148923, at *12. In similar circumstances, Courts have also denied class certification where the damages model did not show how price was specifically affected by plaintiffs’ theory of liability. See, e.g., POM Wonderful, 2014 WL 1225184, at *5 (rejecting plaintiff’s model that “simply calculates what the price difference was” and did not “draw any link between [the Company’s] actions and the price difference”); Werdebaugh, 2014 WL 7148923, at *13 (finding plaintiff’s model “incapable of providing a damages figure that is consistent with Plaintiff’s liability case” when the court could not determine whether price fluctuations resulted from several factors). In sum, unable to identify a specific model of damages and unable to account for confounding factors, Dr. Nye’s report falls short of the “evidentiary proof” required for class certification. See Longest, 308 F.R.D. at 333; Werdebaugh, 2014 WL 7148923, at *14. Class certification should be denied. B. Predominance of Class-wide Damages Cannot Be Established until the Court Determines “The Time [the] Suit Was Brought” Dr. Nye’s failure to identify a specific model of damages is unsurprising, given that no such model can exist until the Court determines the starting day of this lawsuit. Indeed, Section 11 provides a statutory formula for damages that requires knowing “the time [this] suit was brought.” 15 U.S.C. §77k(e). As the Ninth Circuit has explained, an established date of “the time such suit was brought” is necessary to determine how damages are measured in an action brought under Section 11. In re Broderbund/Learning Co. Sec. Litig., 294 F.3d 1201, 1204 (9th Cir. 2002) (“damages must be ‘measured by the difference between the amount paid for the security and its price at either the time it was sold or the date the Section 11 claim was filed.’”) (citation omitted; emphasis added); see also In re Wash. Mut., Inc. Sec., Deriv. & ERISA Litig., 2010 U.S. Dist. LEXIS 142992, at *52 (W.D. Wash. Oct. 12, 2010) (resolving a dispute over the date for “time such suit Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 25 of 31 Page ID #:2433

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -20- was brought” in order to determine damages under § 77k(e)) (citation omitted).6 Dr. Nye agrees there is no way to calculate damages until the Court decides the date of the first-filed complaint. His report states that damages can be calculated in multiple ways depending on the determined date of the first-filed complaint: “[I]f it is determined that the relevant Section 11 suit date in this matter occurred on or prior to August 10, 2017 . . . then the value of Snap stock on such date can be estimated as the closing price of the stock minus the price inflation present in the stock that day. Otherwise, if it is determined that the relevant suit date occurred after August 10, 2017 . . . then the value of Snap stock on such date is simply the closing price of the stock that day.” Nye Rep. ¶ 62.7 Without a date for the first-filed complaint, the damages in Nye’s report range from a value computed with a first-filed complaint date of May 16, 2017, to a second value computed with a first filed complaint date of November 1, 2017. See id. Nye’s report does not dispute that damages cannot be calculated without a first-filed complaint date, and a class should not be certified when damages are not calculable class-wide. Defendants respectfully submit that “the time [this] suit was brought” necessarily is the date of the first-filed complaint, May 16, 2017. V. THE PROPOSED CLASS REPRESENTATIVES HANDPICKED BY LEAD COUNSEL ARE INADEQUATE FIDUCIARIES The Court should also decline to certify the Class for an additional reason: the 6 Notably, Mr. Joseph Iuso, the plaintiff in Iuso v. Snap, Inc., et al., 17CIV03710 (San Mateo County), has also recognized the uncertainty of “the time such suit was brought” for measuring damages in this case and moved to intervene to oppose class certification. ECF No. 120. 7 Defendants believe that the “value” for damages calculation should be measured by the price of the stock on the date of the first-filed complaint, which in this case is May 16, 2017. See Broderbund, 294 F.3d at 1204 (“[D]amages must be ‘measured by the difference between the amount paid for the security and its price at either the time it was sold or the date the Section 11 claim was filed.’”) (citation omitted); Wash. Mut., 2010 U.S. Dist. LEXIS 142992, at *54-55 (calling Broderbund “binding Ninth Circuit authority” and holding that “damages are calculated in this case as the difference between the price paid and the price on the date the suit was filed”). Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 26 of 31 Page ID #:2434

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -21- class representatives proposed by Lead Counsel cannot “fairly and adequately protect the interests of the class.” See Fed. R. Civ. P. 23(a)(4). “A representative is adequate where: (1) there is no conflict of interest between the representative, his counsel, and absent class members; and (2) the representative and his counsel will ‘pursue the action vigorously on behalf of the class.’” Jovel v. Boiron, Inc., 2014 WL 1027874, at *1 (C.D. Cal. Feb. 27, 2014) (citation omitted). Rule 23(a)(4) protects against “constitutional due process concerns” and mandates “absent class members must be afforded adequate representation before entry of a judgment which binds them.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998). “[T]he court must feel certain that the class representative will discharge his fiduciary obligations.” Burkhalter Travel Agency v. MacFarms Int'l, Inc., 141 F.R.D. 144, 154 (N.D. Cal. 1991) (quoting Koenig v. Benson, 117 F.R.D. 330, 333-34 (E.D.N.Y. 1987)). Here, as discussed below, the evidence shows that Messrs. Allen and Dandridge, the proposed class representatives, would be inadequate class fiduciaries. A. The Proposed Class Representatives Have Failed to Oversee the Litigation Class representatives do not satisfy their Rule 23(a)(4) burden when they fail to supervise the case and let their attorneys drive the litigation. Courts have cautioned that “in the securities fraud context the adequacy inquiry must be particularly searching. This is so because the PSLRA was ‘intended to empower investors so that they, not their lawyers, control securities litigation[.]’” Shiring v. Tier Techs., Inc., 244 F.R.D. 307, 315 (E.D. Va. 2007) (citation omitted). As explained in Quarterdeck, factors amounting to class representatives’ “abdication of their role as fiduciaries for the class to their attorneys[,]” include “reli[ance] on investigations by counsel to support their claims[,] . . . leav[ing] the conduct of the litigation to [their] attorneys to vigorously pursue the case[,]” and not Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 27 of 31 Page ID #:2435

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -22- participating in key decisions such as dropping certain defendants from the case. 1993 WL 623310, at *5-6; see also Simon v. Ashworth, Inc., 2007 U.S. Dist. LEXIS 96131, at *6 (C.D. Cal. Sept. 28, 2007) (finding plaintiff inadequate where, among other factors, he “testified that he does not consider himself to be supervising this case, and he would not know what to do in the event of a disagreement with his attorney.”). Here, Mr. DiBiase has abdicated his role as lead plaintiff, and the proposed replacements—Messrs. Allen and Dandridge—candidly admit ignorance of key issues in this case, and instead defer to counsel. 1. Lead Plaintiff Is Inadequate and Has Failed to Participate in Discovery Lead Plaintiff DiBiase’s absence from his own noticed deposition speaks volumes about his commitment to oversee this litigation on behalf of the Class. Mr. DiBiase cancelled his deposition the night before it was set to proceed and now proposes to withdraw from the action. A class should not be certified when the Lead Plaintiff refuses to participate in the litigation. Kohler v. Hyatt Corp., 2008 U.S. Dist. LEXIS 63392, at *17 (C.D. Cal. July 23, 2008) (“The failure to make such [evidentiary] disclosures and to cooperate in the taking of Plaintiffs’ depositions casts doubt on the adequacy of Plaintiffs and their counsel to pursue the claims asserted here on behalf of the putative class.”); Mendoza v. Home Depot, U.S.A., Inc., 2010 U.S. Dist. LEXIS 13025, at *20-21 (C.D. Cal. Jan. 21, 2010) (finding plaintiff inadequate because of unwillingness to appear for deposition). 2. Messrs. Allen and Dandridge Yield Decisions to Counsel Proposed class representatives Allen and Dandridge would also be inadequate fiduciaries of the Class, as demonstrated by their reliance on attorneys to make decisions. Mr. Allen freely admitted that he follows his Lead Counsel’s lead, accepts no responsibility to direct the litigation, and has not contributed any opinion to this litigation. Ex. 4 (Allen Tr.) at 158:18-159:6. Mr. Dandridge likewise expressed his deference to counsel to make decisions and stated, in similar fashion Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 28 of 31 Page ID #:2436

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -23- to the representative in Simon, that in disagreements with counsel he would ultimately still rely on counsel. Ex. 5 (Dandridge Tr.) at 154:16-23; Simon, 2007 U.S. Dist. LEXIS 96131, at *7 (finding class representative inadequate where he did not commit to his duties, relied heavily on counsel, and admitted he “would not know what to do in the event of a disagreement with his attorney.”). As in Simon and Quarterdeck, the unambiguous reliance on counsel to pursue the case shows that these hand-picked class representatives are “true ‘stand-in’ parties, selected by lawyers to fill a required role.” Quarterdeck, 1993 WL 623310, at *6. 3. Messrs. Allen and Dandridge Lack Basic Knowledge about the Litigation Class certification should also be denied where proposed class representatives lack the basic knowledge necessary to make decisions as fiduciaries of the proposed class. Courts have repeatedly held that class representatives are inadequate where they have a demonstrated lack of familiarity with the suit. See, e.g., Quarterdeck, 1993 WL 623310, at *5 (finding named plaintiffs inadequate where they were unaware that certain defendants were dropped from the case and unaware of damages issues) (citation omitted); Giron v. Hong Kong & Shanghai Bank Co., 2017 U.S. Dist. LEXIS 189087, at *38-39 (C.D. Cal. Nov. 15, 2017) (finding named plaintiff inadequate where he never saw the complaint and could not identify defendants); Burkhalter, 141 F.R.D. at 153 (“[A] party who is not familiar with basic elements of its claim is not considered to be an adequate representative for the class because there is no sense that there is an actual party behind counsel's prosecution of the action”). Here, the Class would, in effect, be leaderless. The two proposed class representatives testified repeatedly to facts that contradicted the theories of liability in this case. For instance, Mr. Allen did not know whether disclosure about competition from Instagram was an issue in this lawsuit, despite the CAC’s heavy focus on the issue. Ex. 4 (Allen Tr.) at 141:24-143:1. Mr. Dandridge went even Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 29 of 31 Page ID #:2437

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -24- further, stating that Snap’s Prospectus disclosed that Snap faced competition from Instagram. Ex. 5 (Dandridge Tr.) at 122:18-23. Similarly, Mr. Dandridge did not believe Mr. Spiegel stated that Snap engaged in growth hacking. Id. at 141:10-142:21. Where proposed named plaintiffs have contradicted core claims of the CAC, their unfamiliarity with the case should disqualify them from being appointed lead plaintiff. See Quarterdeck, 1993 WL 623310, at *5; Burkhalter, 141 F.R.D. at 153 (“courts have refused to allow a person to represent a class when, for example, she ‘appeared unaware of even the most material aspects of her action not knowing why these particular defendants are being sued . . .’”) (quoting In re Storage Tech. Corp. Sec. Litig., 113 F.R.D. 113 (D. Colo. 1986)); Kassover v. Computer Depot, Inc., 691 F. Supp. 1205, 1214 (D. Minn. 1987) (finding lead plaintiff inadequate where “plaintiff admitted at several points he possesses ‘no facts’ to support essential allegations in his complaint.”), aff’d mem., 902 F.2d 1571 (8th Cir. 1990). In addition to contradicting fundamental claims in the CAC, the proposed class representatives could not name even the most basic of facts about the lawsuit they are supposed to steer on behalf of a class. Neither Mr. Allen nor Mr. Dandridge could name the Individual Defendants or Liaison Counsel for the Class. Ex. 4 (Allen Tr.) at 29:25-30:12, 138:18-23; Ex. 5 (Dandridge Tr.) at 26:9-28:2, 117:22-118:3. Mr. Dandridge even said he has never heard of the name Anthony Pompliano, an individual central to the complaint, whose name appears in the complaint over 200 times. Ex. 5 (Dandridge Tr.) at 130:21-23. The inability of Messrs. Allen and Dandridge to recognize key figures in the case, together with their statements contradicting the CAC, shows that the Class lacks an adequate representative. See Quarterdeck, 1993 WL 623310, at *6 (finding named plaintiffs inadequate where they were unaware of dropped defendants and “neither plaintiff named current co-lead counsel, Milberg, Weiss, as their counsel, indicating that they were unsure to whom they were delegating the responsibility for pursuing the action.”); Giron, 2017 U.S. Dist LEXIS 189087, at *38-39 (finding Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 30 of 31 Page ID #:2438

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ OPPOSITION TO LEAD PLAINTIFF’S MOTION FOR CLASS CERTIFICATION No. 2:17-cv-03679-SVW-AGR -25- named plaintiff inadequate where he never saw the complaints and could not identify the defendant); Burkhalter,141 F.R.D. at 153-54 (finding class representative inadequate where he “lacked a basic understanding of the identity of some of the defendants in this action”). Class certification should be denied, without prejudice, and the lead plaintiff process reopened to permit a qualified lead plaintiff, selected by the Court rather than by counsel, to steer the litigation. CONCLUSION For each of the foregoing reasons, the Court should deny class certification at this time and reopen the lead plaintiff process. Dated: October 5, 2018 WILSON SONSINI GOODRICH & ROSATI Professional Corporation By: /s/ Boris Feldman Boris Feldman Attorneys for Defendants Snap Inc., Evan Spiegel, Robert Murphy, Andrew Vollero, and Imran Khan Case 2:17-cv-03679-SVW-AGR Document 124-2 Filed 10/05/18 Page 31 of 31 Page ID #:2439